A new Medicaid 1115 Waiver for Texas has been approved. Worth approximately $25 billion through 2022, the new Waiver includes different terms and conditions that will change hospitals’ supplemental payments. While maintaining significant funding for uncompensated care and Delivery System Reform Incentive Payments, the new Waiver requires two major changes:

Transitioning from use of the current "UC tool" to a modified S-10 Worksheet to calculate and distribute UC payments based on hospital charity care costs alone. Medicaid shortfall and bad debt costs no longer will be allowed.

Winding down DSRIP projects and funding.

Uncompensated Care

Texas will receive uncompensated care funding through Sept. 30, 2022. The size of the UC pool will be determined solely by hospital charity care provided to the uninsured, but UC payments can be distributed among all qualifying providers, including non-hospital providers whose costs are not counted in the size of the UC pool. Federal UC funds for 2018-2022 are as follows.

2018: Approximately $3.1 billion (level funding)

2019: Approximately $3.1 billion (level funding)

2020: Resized and adjusted based on 2017 S-10 Data (or $2.3 billion if no data)

2021: Resized and adjusted based on 2017 S-10 Data (or $2.3 billion if no data)

2022: Resized and adjusted based on 2017 S-10 Data (or $2.3 billion if no data)

DSRIP

Under the terms of the new Waiver, CMS will temporarily continue DSRIP funding. However, funding is phased down to zero over the five years. THHSC must submit a draft plan for CMS' approval that outlines the transition from DSRIP to sustainable delivery system reforms that do not require DSRIP funding.

Resources

Texas’ Medicaid 1115 Transformation Waiver represents a major resource in reshaping the delivery of health care in communities across the state. Hospitals are collaborating with providers of all types to implement ways to make health care more effective and efficient. To demonstrate the local impact of the waiver for members of Congress and highlight the innovative work hospitals and their partners are pursuing, THA produced a series of one-pagers highlighting the unique needs and challenges of each region, and the projects developed to meet those needs ...
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In September 2014, CMS notified THHSC that it was deferring $74 million in federal Medicaid funds tied to private hospital uncompensated care payments from 2013 under the Waiver. While it did not accept the financial arrangement, CMS ultimately released the deferral in January 2015 and stated its willingness to work with THHSC before making a final determination.

In May 2015, THHSC and CMS revisited the issue, and shortly thereafter, CMS agreed that if changes to private hospital funding were required following the discussions, Texas would have until Sept. 1, 2017 to transition to other funding mechanisms without risk of disallowance on the same grounds as the 2014 deferral. Discussions concluded in September 2015 without CMS’ authorization of the private hospital funding arrangement in question.

In September 2016, CMS issued another disallowance notice to THHSC stating that$27 million in federal uncompensated care payments were being disallowed because they constituted “impermissible provider donations.” THHSC is appealing that decision.

According to Texas Government Code 305.027, portions of this material may be considered “legislative advertising.” Authorization for its publication is made by John Hawkins, Texas Hospital Association, 1108 Lavaca, Suite 700, Austin, TX 78701-2180.

Hospitals across the state are experiencing an influx of patients with flu; in some cases, going on “medical divert” to transfer patients to other facilities because they are at capacity. Flu season...

The Texas Hospital Association often publishes white papers on issues affecting Texas hospitals and the health care of Texans.

Texas Medicaid in Perspective: Texas Medicaid, operated in partnership with the federal government, serves primarily low-income pregnant women and children but also individuals with disabilities and older adults. Learn More

2017 Texas Hospitals’ Policy Priorities: Hospitals also are required by federal law to provide, at a minimum, a medical screening to anyone who seeks it and to provide stabilization and treatment services for an emergency medical condition, regardless of a patient’s ability to pay. Learn more

Hospital Financing Overview: This document is intended to provide a high-level overview of the hospital financing system in Texas and the challenges that exist – challenges that threaten hospitals’ continued ability to provide the highest quality care for all Texans. Learn More

1115 Medicaid Transformation Waiver: Learn how the Transformation Waiver is making health care in Texas more effective and efficient and why renewal is so important for Texas hospitals. Learn more

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The Texas Hospital Association would like to hear from both its members and from the public for whom Texan hospitals and health systems work to keep healthy.